Published: February 8, 2013 at 1:53 pm

Forest Oil Corporation (NYSE:FST)is down almost 50% over the last twelve months, but that has not been a deterrent for billionaire Steve Cohen of SAC Capital. A recent SEC filing shows that Cohen upped his stake in Forest Oil by 150%; he owned 4.6 million shares at the end of the third quarter and now owns 11.5 million shares, or 9.8% of Forest Oil’s outstanding shares (check out Cohen’s stock picks). Cohen has been active of late, not only doubling his Forest Oil position, but taking a renewed interest in DVR pioneer TiVo(read more here).

Forest remains a somewhat speculative play given its hindered liquidity and elevated debt levels. A couple other notable E&P companies include Quicksilver Resources Inc (NYSE:KWK), Newfield Exploration Co. (NYSE:NFX), and Pioneer Natural Resources (NYSE:PXD). By stacking these companies up against each other we see just how severe the balance sheet issue is:

Forest Oil

Quicksilver Resources

Newfield Exploration

Pioneer Natural

CurrentRatio

0.3

1.4

1.0

1.6

Debt Ratio

75%

87%

33%

27%

Forest Oil has been under pressure of late and is now embarking on restructuring efforts and debt reduction. Forest Oil has been dumping assets, which includes Alaska, Gulf of Mexico, and old Permian Basin assets, including the spin-off of Lone Pine Resources Inc (NYSE:LPR) in September of 2011. During the last six months, management has sold roughly $600 million of non-core assets, and more recent divestment news includes plans to offload its assets in Texas for $325 million, which it will use for paying down debt. As a result of these initiatives the oil and gas company has reduced its long-term debt around 30% from a $3 billion high in 2009 to just over $2 billion now:

The major competition has also been struggling: Quicksilver posted third quarter results that saw top and bottom line results falling short of consensus estimates, with weak natural gas prices and low production levels being the major drags. Pioneer also posted below-expected EPS last quarter, with results falling on a year over year basis. Newfield, on the other hand, has been hitting on a number of cylinders, including better utilization from wells drilled in the Bakken and Eagle Ford. The oil and gas company expects to boost output by about 50% in the coming years. Getting back to Forest Oil, the company has robust exposure to natural gas, but now plans to diversify its production portfolio by expanding its liquid production. This includes focusing on Eagle Ford and the company’s core acreage position. The shift will help not only drive the company’s top line but also boost margins as its focuses on higher-margin oil development.

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